Markets Watching Bernanke

Posted August 22nd, 2011 at 1:30 pm (UTC-5)
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Recent weak economic data and wild swings on the stock market mean investors will be watching even more closely than usual when the head of the U.S. central bank gives an economic policy speech on Friday.

Federal Reserve Chairman Ben Bernanke and his colleagues said earlier this month that economic growth is slower than expected, the job market is getting worse, and the troubled housing sector is still weak. Top Fed officials discussed “the range of policy tools” available to promote a stronger recovery.

The Fed usually tries to stimulate the economy by cutting interest rates. Officials cut rates to near zero some time ago and say they will keep them there until mid-2013. Officials also have made two huge efforts to buy up certain financial assets in a further campaign to push down long-term interest rates to encourage borrowing, investment and expansion.

But those efforts have not been sufficient to push up growth enough to cut the high jobless rate.

Bernanke is attending an annual gathering of top economists later this week at a mountain resort in Jackson Hole, Wyoming. Last year at the same gathering, the Fed chief previewed one of the efforts to buy up financial assets.

There are many articles in the financial media speculating that Bernanke might announce further asset purchases, or might take steps to keep previously purchased assets, or perhaps might take other steps intended to encourage banks to lend to businesses.

Later this week, experts will publish new U.S. economic data on new home sales, the factory sector, consumer attitudes, the job market, and revised figures on U.S. economic growth.